Eastern promise

Posted on Tuesday 19 January 2010 byUlster Business

China’s exports rose in December 2009 for the first time in 14 months. As the country touted to overtake Germany as the world’s largest exporter resumes its upward growth trajectory, Ulster Business editor David Elliott travelled to Hong Kong to hear how Northern Ireland businesses can best take advantage of such an opportunity.

When you work for a magazine called Ulster Business you’d think there’d be little chance of travelling far outside the locality in the name of journalism. However, the Northern Ireland economy hasn’t posted such impressive growth in the last few years solely as a result of internal consumption. Instead, we’re relying more and more on export trade.
The Department of Enterprise, Trade and Investment estimates 36.3% of sales made by Northern Ireland manufacturing companies in the 2008/2009 period were accounted for by exports worth £5.9 billion, an 8.2% jump on the previous year. This figure only includes manufacturing companies so if you add in our growing service base it’s not difficult to see we wouldn’t be as prosperous without international trade.
Armed with this knowledge, I headed off to Hong Kong in late November/early December as a guest of the Hong Kong Trade Development Council, or HKTDC, on what I like to call a fact finding mission but which my colleagues referred to as a “jolly”, whatever that is. I’ll get back to that misinformed opinion later.
Ostensibly, the HKTDC is a version of Invest NI, focused on “creating and facilitating opportunities in multinational trade for Hong Kong companies, especially small and medium-sized companies, and to create a positive image of Hong Kong”. The purpose of bringing a journalist from Northern Ireland, along with around twenty others from countries as far afield as New Zealand, Indonesia and Germany, was basically to sell Hong Kong as a business destination.
The region has been well known as a financial service hub for years when it flourished as a British colony and was able to take full advantage of the trade opportunities this offered to a small island off China’s south coast. The British government’s handover to the Chinese in 1997 could have seen a sea change in the governance of the area but the “one country, two systems” agreement means Hong Kong continues to enjoy significant autonomy to mainland China, particularly within its economy. If evidence were needed as to its popularity, look no further than the City of London where investment bankers, fed up with having their inflated bonuses taxed by the government, are reported to be leaving in droves for a low tax lifestyle in a less regulated Hong Kong economy.
This latter fact is ably demonstrated by Hong Kong’s spot as number one in the Wall Street Journal’s global Index of Economic Freedom, a position it has held for a number of years. It describes economic freedom as a situation where “individuals are free to work, produce, consume and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”
Spend any time in Hong Kong and you’ll concur with this statement and quickly understand why the inherent thirst for making money in the region flourishes in such an environment.
But don’t forget it is still a part of China, one of the fastest growing countries in the world, one which is becoming more and more important both as a global exporter and importer. So, Hong Kong finds itself with a highly developed powerhouse economy itself while also part of an economy with the potential to be a colossus.
The hard sell
Part of the sell to foreign journalists such as myself was therefore easy to guess: if you want to do business with China, come through Hong Kong. No language barrier, an understanding of the culture of business in China and experience dealing with UK companies means having a helping hand from a Hong Kong company could save time money and ultimately bring about profitable deals.
With this in mind and a rabble of journalists in tow, the HKTDC weren’t about to leave us to see the sights of Hong Kong after a late breakfast and a game of tennis. Instead they had a schedule packed with visits to indigenous companies, conferences and interviews, a schedule demanding enough to bring out the national stereotypes of the assembled hacks within minutes and its worth establishing getting this out of the way now. The Germans and Japanese arrived early to everything, took copious notes and showed immense enthusiasm throughout. Those from the UK turned up pretty much on time but displayed scepticism about some of the odder business ventures while accommodating themselves very well at the bar. The French turned up late or not at all, raised a questionable eyebrow to most things and argued amongst themselves. The Spanish turned up two days late and left two days early. Oh, and just to throw a spanner in the works, the New Zealand journalist knew nothing about rugby. But I digress.
Of the many companies and people we were introduced to, one of the highlights was Sir Gordon Wu who, through his company Hopewell Holdings, has been responsible for much of the infrastructure in Hong Kong and a large percentage in China.
“People told me I was crazy to be building roads when most people only had bicycles,” he said.
Despite touching 75, his vision for the future of Hong Kong hasn’t blurred and he continues to advocate stronger transport links for the region to the Pearl River Delta on the southern Chinese mainland, an area steeped in manufacturing companies. The poster project for this is the proposed bridge linking the west side of Hong Kong to Macau – a region which enjoys similar governance to Hong Kong following a handover to the Chinese government by Portugal in 1999 – and the mainland Chinese city of Zhuhai on the west side of the Pearl River Delta. The People’s Republic of China government have supported the project and, once completed, it will provide quick and easy access to the manufacturing region.
Another highlight was visiting Lan Kwai Fong, an area well known to visitors to Hong Kong as an entertainment district with many bars, restaurants and nightclubs. We met with Allan Zeman, a Canadian and chairman of Lan Kwai Fong Holdings, who moved to Hong Kong in 1975. Sensing the need for a western restaurant, he opened California Restaurant in 1983 in what was then an unfashionable and run down area. “Build it and they will come” seems to have been his philosophy for California quickly had queues out onto the street, a sight which prompted Zeman to buy up the neighbouring buildings and open more bars and restaurants.
Now one of the most influential people in Hong Kong and with 36 offices in other locations around the world, Zeman doesn’t overlook the debt he owes to the region’s openness in accepting outsiders and encouraging economic growth.
“Hong Kong is one of the best places in the world to do business,” Zeman said in the board room of his office. “It’s a ‘can do’ spirit and has only limited government interference.”
His love of the culture recently saw him surrender his Canadian passport – an act which apparently received a disbelieved reaction from the Canadian government – in favour of becoming a Chinese citizen.
Alongside these established businesses we were also introduced to some fledgling companies.
At the Hong Kong Science and Technology Park we met Dr Cory Kidd, another Canadian who has chosen to set up his business in Hong Kong. Cory’s product is a Autom, an interactive robot which helps people lose weight (cue raised eyebrows all round). The product may seem outlandish but as he says, a small portion of the huge US dieting market could reap rewards. Besides, the reason for us meeting Cory was to demonstrate how a manufacturing company, particularly one involved in a high tech product, can base its headquarters in Hong Kong and be close to a low cost manufacturing base in China.
“Being able to nip across and spend more time with the manufacturer helps develop the product much quicker and with less margin for error,” he said.
Hong Kong wine?
Upping the outlandish quota by some margin was the 8th Estate Winery, a first even for Hong Kong. Bearing in mind Hong Kong has very little cultivatable land, a winery wasn’t the first thing I thought we’d be going to see. This wasn’t diminished after arriving through the service entrance of a large industrial block but all became clear when we entered a unit decked out in oak wine barrels.
The 8th Estate makes wine from – and you can imagine the French journalists’ faces when they heard this – imported frozen grapes. The tasting session didn’t garner many fans from the group but again the story here isn’t about the product but about the welcome the concept has received. The 8th Estate has found a market supplying a niche product – wine produced in Hong Kong – and there are few places in the world where such a – let’s be frank here – bonkers idea would get the backing or indeed muster the enthusiasm to get to this stage.
This attitude sums up Hong Kong, a place where everyone – from the international business person to the stallholder on the street selling live fish – has an eye on business, where outsiders are welcomed and where innovative ideas are embraced.
It’s by no means perfect – property prices are incredibly high, a cloud of pollution seems to constantly hang over the city and access to countryside involves a half hour boat trip – but its expat inhabitants say these are bearable foibles. And for those companies in Northern Ireland looking to establish either supply links or sell into China, the path could be smoothed considerably by having a base or using a broker in Hong Kong.
Mission accomplished?
A lucky coincidence of my visit to Hong Kong was the fact it overlapped with an Invest NI trade mission. In true HKTDC getting-things-done style, no sooner had I stepped off the plane and dropped my bags in the hotel room than I was on one of the historic Star ferrys heading across Victoria Harbour on the 20 minute hop to the InterContinental Hotel in neighbouring Kowloon.
The transition from Belfast in November to a bobbing wooden ferry looking back at the skyscrapers of Hong Kong came full circle when I walked into the InvestNI reception at the Kowloon hotel where representatives from 25 Northern Ireland businesses were gathered to round off a 10-day mission to Hong Kong and China.
Of these 25, mission manager Linda Forte – described as the Mother Hen of a previous trade mission attended by a predecessor in this job – made sure I got to meet most of them. This may have been because Invest NI has come under increased scrutiny since the release of the Independent Review of Economic Policy, or IREP, but you got the feeling Linda was happy to show off the progress this group had made.
While criticism levied at Invest NI has been wide and varied, its export missions have generally fared well and, speaking to local business people in the course of this job, there’s a feeling they produce excellent results for those companies involved.
Certainly those I met in Kowloon were fans and found the investigative work and preparation the InvestNI team had put into the trip had saved time, effort and money.
One in particular had visited China previously on an independent visit and only managed to organise meetings with five potential customers/suppliers. On this visit he had already met with nearly three times that number as a result of the efforts of the InvestNI team in sourcing contacts, organising meetings and laying on transport.
It’s all too easy to knock InvestNI, particularly when hard and fast figures to quantify the results of such missions are nigh on impossible to come by, but in this instance - from guitar manufacturers to waste handlers - I encountered nothing but praise for the organisation.